SMEs and MSMEs are an integral pillar for the growth of our economy. And in order to gain a competitive edge in the market, it becomes imperative that they have access to the equipment financing, which can aid the installation of modern machineries that can fasten up the work and at the same time increase the productivity without compromising on the quality of the products. The following discussion will highlight the advantages of machinery loans and various lenders offering this loan.

What is a machinery purchase loan?

Modern tools and equipments are an integral part of business growth. These state-of-the-art equipments are in great demand because of their flawless results and delivering quality products. But all these come at a cost which may sometime fall on the higher side for Small and Medium Enterprises. Business loans for SMEs and MSMEs is a great way to expand the business and machinery loan is one such type of loan that offers special benefits to the borrower.

Sectors like construction, packaging and manufacturing depend on machinery which helps in efficiently completing the tasks on time. The purchase of such machinery can be a costly affair, especially, if the company is new and is of small and medium size. Machinery loans offered by different banks and NBFCs have made it easy for SMEs and MSMEs to purchase equipment which can give them a competitive edge.

What are the advantages of machinery loan?

Access to money easily - To ensure that there are no roadblocks on your way to achieving business success, you must have machinery that can ensure higher productivity. Machinery loans give access to the loan amount which you can use for your business advantage.

Collateral-free loan- Most of the machinery loans are collateral-free and hence there is no need for a guarantor.

Instant access to the loan- One of the best features of machinery loans is that they are processed quickly and hence you get instant money in the account.

5 Top Machinery Loan Providers-

There are various machinery loan providers. Some of the banks and NBFCs name it as equipment finance. Some of the prominent names include the following:

1.Bajaj Finserv- It is one of the most prominent Non-Banking financial institutions providing funding for various purposes. Machinery loan is one of its popular loans.

Eligibility-

The borrower must be between the age of 22-25

The business should be at least 3 years old

Your business should have its ITR filed for at least 1 year

Charges-

Machinery loans at Bajaj Finserv come at an interest rate of 18%

The processing fee is up to 3% of the loan amount

Documentation- Bajaj Finserv has a very simplified machinery loan application process. It comes at a lucrative interest rate but to apply for a loan, you must submit the following documents:

3. DHFL Machinery Loan- It is one of the most popular choices when it comes to machinery loan. The loan comes at competitive interest rates and easy repayment options thus making it easy for people to apply for the same.

Eligibility-

The following are eligible to apply for machinery loan from DHFL:

Partnership companies

Limited Liability Partnerships

Proprietorship

Private Limited Companies

Machinery loan tenure comes to be up to 6 years.

Documentation- To apply for a business loan from DHFL, the applicant must submit a duly filled application form along with the following documents:

Identity Proof- It can be a PAN card, Aadhaar Card, Voter ID, Passport.

Address Proof- Driving License, Passport, Aadhaar card, Utility bills

Documents of property ownership

ITR for the last 2 years

Profit and Loss account certified and verified by CA for the last 2 years

The balance sheet for last 2 years.

Last 6 months bank statement

Loan Processing Charges- It is up to 1.25% - 2% of the loan amount plus taxes.

Invoice of the machinery for which the loan has been applied for

Business existence certificate

Property documents

4. Mahindra Finance- When it comes to machinery loan providers then Mahindra Finance emerges as a popular option. It offers machinery loan quickly and comes with easy repayment options thus making it one of the most preferred choices when it comes to machinery loan.

You can get a loan for up to Rs. 25 crore

The loan tenure can range between 6 months to 5 years

Eligibility-

The following are eligible for machinery loan:

Partnership firms

The company must have at least 3 years of experience

Greenfield projects but only from the established player

Documentation-

KYC documents of the owner

Security offered

Audited balance sheet (last 3 years)

Performa of the invoice of the machinery to be purchased

Growth of business is the primary objective of every business and machinery loan proves to be very helpful in this direction. There are many machinery loan providers; they compare their interest rates and other charges before choosing the one that can be best for your business. Fill this blog form, we would contact with you at the earliest.